31 Days To Fix Your Finances, Day 25: Evaluating Your Expenses – Credit Cards

The Simple Dollar offers a month-long plan for fixing your finances. All you need is an open mind and an hour each day.

Today is the final day of expense evaluation before we begin to tie things up (the month is nearing an end, after all), so today we’ll tackle what is perhaps the biggest financial rough patch in the United States: credit cards. As anyone who has ever faced a big pile of credit card debt can tell you, credit cards are nefarious little devils that can sneak up on you and destroy all of your financial planning if you’re not careful. Thus, here are some tips for managing that month-to-month credit card debt; spend some time today implementing them to reduce your monthly credit card spending.

Look into moving your balance to another card. If your credit is strong, you can easily obtain a 0% APR on balance transfers for as long as 18 months. Doing this can transform high interest debt into no interest debt, meaning that each payment will go straight towards eliminating the balance. Be sure, though, that you have eliminated a lot of the balance during this period, because it will be painful when the interest payments come back.

Ask for a rate reduction. Another potential avenue for reducing the monthly interest on a card is to call the number on the back of the card, get to a live operator, and ask to speak to a supervisor. At that point, tell them you’re tempted to take a balance transfer offer in order to consolidate your debt and request that they reduce your interest rate. Quite often, they’ll be happy to oblige because earning less interest on a credit card is better than earning nothing at all.

Look for lower interest methods to consolidate your credit card debt. You may have available to you a home equity line of credit that is at a much lower interest rate than your credit cards, so it might be worthwhile to pay off the cards with the HELOC. Another possibility is discussing a personal loan with your local bank; you might be able to consolidate a lot of the debt into a relatively low interest loan. However, these tactics don’t mean you have a clean bill to spend again! Put the credit cards up for a while and learn how to live on the money you have.

Stop using credit cards for day to day expenses until you can eliminate the debt. Until I got my credit cards under control, I moved to using checks and cash wherever possible, supplemented by a debit card. I treated the credit card bills as a loan that needed to be paid off, not as a tool to buy more stuff I couldn’t afford. I didn’t cut them up, though; I just put them in a place that was hard to access. Why? Canceling a bunch of credit cards all at once can be severely detrimental to your credit health.

Tomorrow, we’ll begin to finish out the month by re-evaluating where we’ve been and looking at ways to keep the momentum going.

Ready? Let’s continue on to the next day.

Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.